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Analysts Bet on Lafarge, Forte Oil, Others for High Returns



  • Analysts Bet on Lafarge, Forte Oil, Others for High Returns

Investors looking for high returns on investment should include Lafarge Africa, Forte Oil and Julius Berger Nigeria Plc in their portfolios, investment analysts have said.

Investment advisory reports by Afrinvest Securities and GTI Securities-two leading investment and stock broking firms, said Lafarge Africa, Forte Oil and Julius Berger Nigeria have potential for high returns in the period ahead.

Afrinvest Securities, which placed a buy ticker on Lafarge Africa, said the cement company has an upside potential of 42.4 per cent, a direct reference to extent of capital gain that could accrue to investors in the company.

According to Afrinvest, recent debt restructuring, energy source diversification and Nigeria price action remain positive drivers of forward earnings for Lafarge Africa.

Analysts noted that Lafarge Africa’s last audited report comfortably outperformed analysts’ estimates on key earnings metrics pointing out that earnings had also stayed resilient in 2017.

Lafarge Africa grew sales by 55.1 per cent and reversed its negative bottom-line with a pre-tax profit of N9.45 billion in the first quarter of 2017 as the cement company ramped up the use of alternative and logistics efficiency to drive growth.

Key extracts of the interim report and accounts of Lafarge Africa for the three-month ended March 31, 2017 showed that sales rose to N81.31 billion in first quarter 2017 as against N52.42 billion recorded in comparable period of 2016. Gross profit jumped by 168.5 per cent from N7.78 billion in first quarter 2016 to N20.89 billion in first quarter 2017.

Compared with pre-tax loss of N2.22 billion in first quarter 2016, the cement company recorded a pre-tax profit of N9.45 billion within the first three months of 2017. Profit after tax also improved significantly to N5.16 billion in first quarter 2017 compared with net loss of N1.87 billion in corresponding period of 2016. Earnings per share thus reversed from a loss of 19 kobo in 2016 to a positive of 92 kobo in 2017.

The report also showed improvement in the balance sheet of the cement group. Total assets rose to N523.76 billion by March 2017 from N502.49 billion recorded by the period ended December 31, 2016. The balance sheet growth was driven by improvements in both fixed and current assets. Total equity funds also increased from N248.95 billion by December 2016 to N263.38 billion by March 2017.

Another investment advisory report by GTI Securities highlighted Forte Oil and Julius Berger Nigeria as two of the best stocks for investors looking for high returns within a 12-month period.

According to the report, Forte Oil has potential to generate capital appreciation of about 250 per cent with an expected target price of N170.41 by the end of the period as against its current price at the stock market.

The report also indicated that Julius Berger Nigeria could post a return of about 117.80 per cent within the period as the share price of the construction firm is expected to rise from its current level to close the period at about N70.

Analysts noted that the 414 megawatts Geregu Power Plant of Forte Oil has started to contribute significantly to the group’s top-line as power generation contribution to revenue increased by 118.61 per cent year-on-year and accounted for 19.79 per cent of total revenue in first quarter of 2017 compared to 8.39 per cent of total revenue in comparable period of 2016.

Forte Oil has 51 per cent stake in a 414 megawatts gas-fired independent power plant, which is selling power to the Nigerian power grid on a guaranteed basis.

“This trend is expected to continue with the power generation business further boosting revenue growth especially with the present drive by the government to ensure that power generation in the country increases. Forte Oil also has the capacity to push higher fuel and lubricants volume sales through its recent retail outlet expansion financed through its issued bonds,” GTI Securities stated.

The report noted that Julius Berger Nigeria has a huge public sector portfolio which includes several high-profile projects including permanent site of the National Institute for Legislative Studies, Abuja, new residences for presiding officers of the National Assembly, Abuja; rehabilitation and extension of Airport Expressway, Abuja; rehabilitation of Badia Roads, Lagos; Lagos–Badagry Expressway, Lagos and Lagos–Ibadan Dual Carriageway, Section 1, Lagos–Shagamu among others.

“We expect that with the focus of the government on infrastructure development a lot of the allotted N1.8 trillion, 30 per cent of the total budget for 2016, will go to ongoing projects across the country.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Global Markets Near Record Peaks and Will Get Stronger: deVere CEO




As the FTSE 100 hits 7,000 points for the first time since the Covid pandemic, global stock markets are poised to “get even stronger”, says the CEO of one of the world’s largest independent financial advisory and fintech organisations.

The observation from Nigel Green, the chief executive and founder of deVere Group, comes as London’s index jumped over the important threshold in early trading in London, gaining over 0.5% to 7024 points.

Mr Green notes: “London’s blue-chip index is up 40% since the worst lows of the pandemic.

“This landmark moment represents the wider optimistic sentiment gripping global markets which are near record peaks.

“We can expect global stock markets to get even stronger as investors look to seize the opportunities from economies reopening.

“They are looking towards economies rebounding in a post-pandemic era due to the monetary and fiscal stimulus, pent-up cash and demand, and strong corporate earnings.

“The current ultra-low interest rate environment and the under-performance of bonds will also act as a catalyst for stock markets.”

However, the CEO’s bullish comments also come with a warning.

“I would urge investors to proceed with caution as there are some headwinds on the horizon, including relations between the U.S. and China, the world’s two largest economies, which could be coming to a tipping point in coming weeks.

“As such, in order to capitalise on the opportunities and mitigate risks, investors must ensure proper portfolio diversification.”

Mr Green concludes: “A variety of factors are going to drive global stock markets. Investors will not want to miss out and should work with a good fund manager to judiciously top-up their portfolios.”

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Refinitiv Expands Economic Data Coverage Across Africa



Building on its commitment to drive positive change through its data and insights, Refinitiv today announced the expansion of its economic data coverage of Africa. The new data set allows investment managers, central bankers, economists, and research teams to use Refinitiv Datasteam analytical data for detailed exploration of economic relationships and investment opportunities among data series covering the African continent.

Securing reliable, detailed, timely, locally sourced content has not been easy for economists who have in the past had to use international sources which often can take many months to update and opportunities to monitor the market can be missed. Because Africa is a diverse continent, economists and strategists need more timely access to country-specific data via national sources to create tailored business, policy, trading and investment strategies to meet specific goals.

Africa continues to develop critical infrastructure, telecommunications, digital technology and access to financial services for its 1.3bn people. The World Bank estimates that over 50% of African inhabitants will be under 25 by 2050. This presents substantial opportunities for investors who can spot important trends and make informed decisions based on robust and timely economic data.

Stuart Brown, Group Head of Enterprise Data Solutions, Refinitiv, said: “Africa’s growing, dynamic and fast evolving economies makes it a focal point for financial markets today and in the coming decades.  As part of LSEG’s commitment to empowering the global markets with accurate and timely data, we are excited about making these unique datasets available via the Refinitiv Data Platform. Our economic data coverage of Africa will provide our customers with deeper and broader inputs for macroeconomic analyses and enable more effective investment strategies and economic research.”

Refinitiv Africa economic data coverage:

  • Africa economics content comprises around 500,000 nationally sourced time series data covering 54 African nations
  • Content is sourced from national statistical offices, central banks and other key national institutions
  • The full breadth of economics categories in Datastream including national accounts, money and finance, prices, surveys, labor market, consumer, industry, government and external sectors
  • International sources including OECD, World Bank, IMF, African Development Bank, Oxford Economics & more provide comparable data & forecasts across the continent

Refinitiv® Datastream® has global macroeconomics coverage to analyze virtually any macro environment, and better understand economic cycles to uncover trends and forecast market conditions. With over 14.2 million economic times series map trends, customers can validate ideas and identify opportunities using Refinitiv Datastream. Access its powerful charting tools, 9,000 pre-built chart templates and chart studies for commonly used valuation, performance, and technical and fundamental analysis.

 Refinitiv continually grows available data – the China expansion in 2019 covered a unique combination of economic and financial indicators. Refinitiv plans to expand Southeast Asia covering Thailand, Vietnam, Philippines and Malaysia with delivery expected in 2021. This ensures that Refinitiv will have much needed emerging market economic content.

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Crude Oil

Oil Rises on Drawdown in U.S. Oil Stocks, OPEC Demand Outlook



Oil 1

Oil prices rose in early trade on Wednesday, adding to overnight gains, after industry data showed U.S. oil inventories declined more than expected and OPEC raised its outlook for oil demand.

Brent crude futures rose 28 cents, or 0.4%, to $63.95 a barrel at 0057 GMT, after climbing 39 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures similarly climbed 28 cents, or 0.5%, to $60.46 a barrel, adding to Tuesday’s rise of 48 cents.

Oil price gains over the past week have been underpinned by signs of a strong economic recovery in China and the United States, but have been capped by concerns over stalled vaccine rollouts worldwide and soaring COVID-19 infections in India and Brazil.

Nevertheless, the Organization of the Petroleum Exporting Countries (OPEC) tweaked up its forecast on Tuesday for world oil demand growth this year, now expecting demand to rise by 5.95 million barrels per day (bpd) in 2021, up by 70,000 bpd from its forecast last month. It is banking on the pandemic to subside and travel curbs to be eased.

“It was a welcome prognosis by the market, which had been fretting about the impact the ongoing pandemic was having on demand,” ANZ Research analysts said in a note.

Further supporting the market on Wednesday, sources said data from the American Petroleum Institute showed crude stocks fell by 3.6 million barrels in the week ended April 9, compared with estimates for a decline of about 2.9 million barrels from analysts polled by Reuters.

Traders are waiting to see if official inventory data from the U.S. Energy Information Administration (EIA) on Wednesday matches that view.

Market gains are being capped on concerns about increased oil production in the United States and rising supply from Iran at a time when OPEC and its allies, together called OPEC+, are set to bring on more supply from May.

“They may have to contend with rising U.S. supply,” ANZ analysts said.

EIA said this week oil output from seven major shale formations is expected to rise by 13,000 bpd in May to 7.61 million bpd.

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